Trepidation is what comes to mind for many employees when asked their feelings about open enrollment, the annual period when they select employer-provided benefits for the coming year.
According to a nationally representative sample of 1,000 employees polled earlier this year, 33 percent cited "annoyance" or "dread" as their primary emotions when they thought about open enrollment and just 10 percent of workers said they were "confident" in the benefits choices they made when the enrollment process was over, according to VSP Vision Care's annual Open Talk about Open Enrollment survey.
In another survey, HR software company Namely found that 31 percent of employees give their employer a "C" or lower when it comes to open enrollment.
Here are some tips from benefits experts that will help you raise your grade this open-enrollment season.
What to Do, and Not to Do
Jennifer Benz, national practice leader at benefits communications firm Segal Benz, shared three bad HR practices that undermine open enrollment and three best practices for doing open enrollment the right way.
- Don't hide vital information from employees. Benz recalls how one company sent out its benefits materials but didn't include monthly costs. "A group of enterprising employees crunched the numbers and came up with estimates and circulated a rogue spreadsheet. Dealing with this communications fiasco took more work" than being upfront about costs, she noted.
Best practice: Be transparent and share the reasons you are making benefits changes. Break down the details and do the work for the employees. Provide scenarios so employees can better understand their options and cost breakdowns for different life situations.
- Don't cram in every benefit at once. Some companies hand out pages and pages of text, jamming a year's worth of communications into a few weeks, and figure they have done what they need to do. "What they have done is confused their employees," Benz said.
Best practices: Communicate the technical details of your various benefits over time. "Don't assume employees will weed through all your materials to make sense of the benefits offered to them," Benz said. Also make full use of visual aids. "Photos, icons, infographics, memes, charts, graphics and more—they all help to attract, and more importantly hold, people's attention," noted Amber Riley, a communications consultant to Segal Benz. "Whether you're driving an open-enrollment campaign, creating a new benefits guide or promoting a wellness program, when you increase the visual pleasure of what you are communicating, your people are more likely to engage, learn, understand and ultimately take action."
- Don't give employees too little time to process their open-enrollment choices. While many people wait until the last day to fill out the health care selection forms, they may have been considering their options with family members for weeks, so giving them just a few days to make decisions is not going to be enough.
Best practice: Build in a time frame that gives HR staff and employees the time they need. Benz recommended three weeks.
"People are always talking about learning from the best practices and success stories, but you can also learn a lot from other companies' mistakes," she noted. "When you prepare for enrollment in advance and anticipate issues—including those you and others have experienced in the past—you are better-equipped to avoid missteps. Your employees will notice and appreciate the extra effort."
[SHRM members-only toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act]
Help Employees Ace Open Enrollment
"Open enrollment is often time-consuming and confusing for employees, but these choices can make a huge financial impact," said Julie Stich, CEBS, vice president of content at the International Foundation of Employee Benefit Plans, an association of benefit plan sponsors. She suggested that HR share the following advice with employees to help prepare them for the upcoming enrollment season:
- Take your time. Take time to really read through the enrollment materials you receive. If you are invited to a face-to-face meeting, make time to attend. It's possible you'll be offered different plan options and coverages this year. The better you understand the changes, the better decisions you'll make.
Take a trip down memory lane. Think back to what happened in your life this year. How often did you and your family members need medical services? What kind? Are any treatments ongoing? Think about any life changes that could affect the benefits you need, like a marriage or divorce, a child going off to college, or a spouse changing jobs.
- Look ahead. Consider what the next year will look like for you and your family. Are you planning to have a baby? Knee replacement surgery? A root canal? Does someone need braces? New glasses? Keep this in mind as you look at your coverage options.
- Dive into the details. It's important to note whether the plans' provider networks have changed. Make sure your doctors are still in-network. Is your chiropractor also covered? Does the plan cover orthodontics? Is your spouse's daily prescription drug covered, and did the coverage change? Also consider areas of need like access to specialists, mental health care, therapies, complementary and alternative medicine, and chronic care. Look at the options offered in all plans, including health, dental, vision and disability.
- Get out your calculator. Add up the amount you'll need to pay toward your health premium plus deductibles, co-payments (flat-dollar amounts) for prescriptions and doctor office visits, and co-insurance (a percentage of the cost you'll pay) for services. Understand what you'll be asked to pay if you seek care outside your network. This will give you a clearer picture of how much you're likely to spend. The plan that looks to be the cheapest option may not really be the cheapest for you.
- Determine what's right for you. Consider your comfort level with risk. If you want your family to be covered for every eventuality, a more traditional plan, if one is offered, might be right for you. If you're comfortable taking on some upfront costs, a high-deductible plan with a lower premium ight be your plan of choice.
- Take advantage of extras. Your employer may offer the option to reduce your health premiums in exchange for your participation in a wellness program or health-risk assessment. It may match some or all of the money you save in your 401(k) plan. It might let you set aside tax-deferred money into a health savings account or flexible spending account. Also, check with your employer to see if it offers voluntary insurance with a group discount and payroll deduction for premiums—like critical-illness, pet, auto and homeowners coverage. If these options work for your situation, sign up.
- Ask questions. Don't be shy about asking your HR or benefits department to explain something if you're not sure. They're there to help and want you to make the best decisions for your situation.
"Taking the time upfront to carefully choose the best options will help employees better manage their finances throughout the year, alleviating stress and promoting productivity," Stich said.
Pretax vs. Post-Tax Premium Payment Options
During open enrollment, employers may offer employees a choice between making pretax or post-tax premium payments to vision and dental coverage plans (and, less often, to health coverage plans). Employees may be confused by this choice.
Most employees select pretax dollar contributions to pay plan premiums. But to help taxpayers cope with hefty out-of-pocket medical bills, the IRS allows taxpayers to deduct unreimbursed health expenses—including dental and vision costs—if these amount to at least 10 percent of an employee's adjusted gross income (AGI) for a given tax year.
According to The Nest, a money and health advice website:
"If you opt for pretax deductions, the amount of income tax you owe gets reduced. The taxes you've paid throughout the year were already lowered to account for your health insurance costs, so don't expect another break come tax time. If, however, you paid for your insurance and other health care costs with after-tax dollars, you can deduct these expenses on your tax return [if unreimbursed expenses exceed 10 percent of your AGI].
"If you need to see more money in every paycheck, you'll benefit most from paying your health insurance with pretax dollars. If you would rather try and get a bigger tax refund at the end of the year, post-tax health care payments may work better for you, especially if your health care costs are very high. …
"Note also that you can only deduct your post-tax medical expenses if you itemize. If your itemized deductions add up to less than the standard deduction, you will benefit more from a pretax health care plan."
Employees' choice for pretax and post-tax coverage will depend on their total tax picture as well as their anticipated health, dental and vision expenses. They may want to speak with a tax advisor if they anticipate significant costs that won't be reimbursed through their coverage.
Related SHRM Article:
Open Enrollment Trends for 2020, SHRM Online, September 2019
Does AI Have a Place in Open Enrollment?, SHRM Online, September 2019
Related SHRM Resource:
Open Enrollment Guide & Resources